RECRON SYNTHETICS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) In this Appeal filed by M/s. Recron Synthetics Ltd., the issues involved are whether they are eligible to the Modvat credit of the duty paid on capital goods financed by the Finance Company and whether the show cause notice issued for denying the Modvat credit is time barred.

(2.) Shri B.L. Narsimhan, learned Advocate, submitted that the Appellants had procured capital goods by entering into lease agreement with the financial institutions namely M/s. HDFC Ltd. and M/s. Sundaran Finance Ltd.; that HDFC only financed the cost of the capital goods and did not finance the Central Excise duty payable on such capital goods; that M/s. Sundaram Finance Ltd. financed the entire cost of the capital goods including the duty payable on such capital goods; that the Commissioner under the impugned Order has disallowed the Modvat credit on the ground that the Appellants had not submitted the copy of agreement or requisite Certificate of the Finance Company before availing the Modvat credit of the duty paid on the capital goods; that the Commissioner has also given a specific finding that the certificate issue by the Finance Company did not relate to the invoice on the strength of which Modvat credit has been availed of by them. The learned Advocate, further, submitted that the entire demand is time barred as the Modvat credit was availed by them during April 1996 to July 1996 and March 1997 to July 1997 after filing the necessary declarations; that they have been submitting the invoices on the strength of which Modvat credit had been availed of alongwith the RT 12 returns to the Department; that these invoices clearly show the name of the Finance Company which has financed the capital goods as well as the name of the Appellants; that these invoices have been duly defaced by the Range Officers after verification; that thus the entire fact of availment of Modvat credit on the capital goods purchased under lease agreement was within the knowledge of the Department and show cause notice issued on 2.3.01 is clearly time barred. He relied upon the decision of the Tribunal in the case of German Remedies ltd. v. CCE, Goa, 2002 (144) ELT 606 (Tri) wherein it has been held that the extended period of limitation is not invokable as the Appellants on their part had furnished the invoices to the Department alongwith the RT 12 returns and these invoices clearly indicated that the goods were on account of M/s. Madaus who had provided the capital goods. Reliance has also been placed on the decision in the case of CCE, Meerut v. Bhushan Steel and Strips Ltd., Final Order No. 381 -82/2003 NB(C) dated 17.1.03 and M/s. Diesel Locomotive Works v. CCE, Allahabad Final Order No. A -354/2003 dated 23.6.03 wherein the demand was held to be time barred on the ground that the assessee had filed RT Returns alongwith the statutory records.

(3.) On merit, learned Advocate, submitted that the credit of the duty was availed on the strength of valid duty paying documents; that further, there is no dispute regarding the actual receipt of the capital goods and its use in the manufacture of dutiable finished products; that non -furnishing of the agreement/Certificate is only procedural lapse in nature, for which reason the credit cannot be disallowed; that in case of the goods financed by the HDFC duty was paid by the Appellants and as per the provisions of Rule 57R(3) the agreement is not to be produced as HDFC has not financed the duty portion of the capital goods; that it is not the requirement of the Rule that the Agreement should be produced before availing the credit; that in respect of capital goods financed by M/s. Sundarn Finance Ltd., they have submitted the Certificate as required under Rule 57R(3); that the show cause notice was issued proposing to deny the credit on the ground that they had not produced the Agreement and the Certificate; that they had produced the copies of the same to the Department; that the Commissioner however, has confirmed the demand on the ground that the Certificate issued does not relate to the invoices under which they had availed the credit and the impugned Order has travelled beyond the show ca use notice. He further, submitted that the Certificate indicated the commercial invoices relating to the purchase of the capital goods; that these commercial invoices indicate the details of the invoices issued under Rule 52A of the Central Excise Rules/1944 and thus the finding of the Commissioner that the Certificate did not relate to the invoices under which credit was availed is incorrect. The learned Advocate also mentioned that a correlation of the Commissioner's notice with invoice issued under Rule 52, was submitted to the Commissioner.